Tata Motors Q3 net down 2% at Rs 3,508 cr

Better than expected numbers of Tata Motors in the December quarter may allay some of the concerns that investors have had. The company's consolidated revenues increased 3.7 per cent year-on-year to Rs 72,256 crore. Net profit for the December quarter declined two per cent y-o-y to Rs 3,508 crore, which was better than what analysts had estimated. The company's performance has been better than the Street's estimates, as Jaguar Land Rover sales in other geographies has been healthy.

The company's performance has been better than estimated because Jaguar Land Rover sales in other markets like North America and UK have offset impact of a weaker model mix and slower sales in China. The company's product portfolio has undergone a major change over the last one year, which has led to some volatility in sales. The December quarter numbers suggest that some of the turmoil is settling down as new products hit the market.

During the quarter, revenues of Jaguar Land Rover declined 1.6 per cent to GBP 5.78 billion. Operating profit declined by 24 per cent to GBP 834 million. JLR's operating margin during the quarter declined to 14.4 per cent from 18.6 per cent in the comparable quarter last year. JLR's profit declined 26 per cent to GBP 440 million. However, the company has received an exceptional item of GBP 30 million as insurance claim for the recoveries related to the fire at Tianjin. Adjusting for this, JLR's net profit is down 31 per cent to GBP 410 million.

Explaining JLR's performance during the quarter, the management said: "The year over year decrease broadly reflects softer sales in China and model mix and non recurrence of an annual China tax rebate (received in Q3FY15 but in current year it was received in Q1) and other items."

The India business too has grown at a healthy pace, driven by continued traction in sales of medium and heavy commercial vehicles. India business revenues rose 10.38 per cent YoY to Rs 10,001 crore, driven by volume growth of 14.8 per cent YoY of medium and heavy commercial vehicles. The company said volume growth came on the back of continued replacement demand, initial fleet expansion demand and better profitability of the freight operators. India business margins came in aat 5.7 per cent against negative margins of 8.2 per cent in the corresponding quarter last year.

Healthy sales along with ongoing cost reduction and other margin improvement initiatives have resulted in improvement of operating margins, after adjusting for the Singur and other one offs in Q3FY15. The loss at the standalone business narrowed to Rs 201 crore after tax against Rs 2,123 crore in the corresponding quarter last year.

Commenting on the results, Religare Institutional Equities said: "Overall adjusted profit after tax (consolidated) at Rs 3,460 crore came in above estimate. While consolidated topline was largely in line with estimates, profit after tax was higher due to lower taxes."